NMPF Questions: Overall Foundation for the Future Proposal

NMPF Questions: Overall Foundation for the Future Proposal

How would mailbox prices be affected nationally by FFTF?

In the long term, FFTF will have a positive impact on the mailbox prices received nationally by reducing negative price volatility and limiting periods of low prices (and margins). In addition, the impact on mailbox prices will vary from region to region, depending on the primary use of milk in each area, and when and if both the Dairy Producer Margin Protection Program (DPMPP) and the Dairy Market Stabilization Program (DMSP) “trigger in.”

FAPRI (Food and Agricultural Policy Research Institute) analysis, with respect to 2009, indicates that the combined effect of the programs would have been a total gain in the All-Milk price of $1.95 per hundredweight with $1.87 per hundredweight due to the DMSP program and 8 cents per hundredweight due to the DPMPP basic coverage.

How would FFTF affect new producers?

A new producer, one who has no ownership interest in an existing dairy facility, would be eligible to participate in the Dairy Producer Margin Protection Program if he/she so chooses. Their production history would be the number of months they are in business extrapolated to a full year’s production. Such producers would also be impacted by the Dairy Market Stabilization Program should that trigger in. The base for that program would reflect their production in the previous three months (or less if there is no three-month history).

What’s Plan B?

What if Congress thinks FFTF is too expensive and needs to be redesigned to operate on less taxpayer money? And, even if Congress accepts FFTF for the next farm bill, what is the long-range plan to reduce dairy’s reliance on the federal treasury?
Preliminary analysis indicates that the combination for the DPMPP with the DMSP will result in savings. The percent of production history covered could be adjusted somewhat if the Congressional Budget Office determines the program exceeds the budget baseline for dairy.
NMPF believes that FFTF is an insurance program and not a subsidy. It is vital that our government provide some protection for those who take the risk of producing our food. An insurance-type program does that effectively.

Ultimately, NMPF believes that producers in the future will have to take more responsibility in managing their risks and sharing the cost of receiving this program. All of the FFTF programs have been designed to be compatible with other existing or yet-to-be-developed risk management tools. We believe Congress will be asking for all producers to begin sharing the cost of the agricultural programs. Since FFTF does exactly that — we are ahead of many other ag sectors when it comes to preparing for the future.